Centerspace(US:CSR)2024-04-30 19:54Financial Data and Key Metrics Changes - The company reported core FFO per share of $1.23 for Q1 2024, reflecting a 7.5% year-over-year increase in same-store NOI [9][18] - Revenues from same-store communities increased by 3.5% compared to the same period in 2023, driven by a 3.9% growth in average monthly revenue per occupied home [18] - Property operating expenses decreased by 2.2% year-over-year, attributed to lower utilities costs and successful real estate tax appeals [20] Business Line Data and Key Metrics Changes - In the same-store portfolio, market rent increased year-over-year by 2.5%, with positive lease over lease growth [10] - New lease trade-outs were flat for the quarter, while renewal pricing increased by an average of 3.4% [10] - Occupancy rates remained slightly above 95%, with indications of new lease trade-outs of approximately 3.5% in April [11] Market Data and Key Metrics Changes - Minneapolis ranked eighth in the nation for apartment absorption over the last 12 months and was the number one search market for four consecutive months [14] - Denver and Minneapolis are the markets with the highest levels of supply, but the supply profile remains relatively muted overall [13] Company Strategy and Development Direction - The company is committed to growing its business despite a challenging economic environment, focusing on capital recycling and maintaining a flexible balance sheet [16][24] - The company plans to spend around $20 million on value-add initiatives this year to keep its product competitive [67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio, citing low bad debt of just 26 basis points in Q1 and stability in the regional economy [12] - The company raised its guidance for 2024, expecting core FFO growth year-over-year of 1% [12][21] Other Important Information - The company closed the sale of two communities in Minneapolis for gross proceeds of $19 million, which were used to pay down debt [15] - The company has approximately $230 million of liquidity at quarter end via cash and line of credit capacity [23] Q&A Session Summary Question: Strength in smaller markets - Management noted strong performance in smaller markets, particularly in North Dakota, due to low supply and strong job markets [28] Question: Ground conditions in smaller markets - Management confirmed continued strength in rental increases and steady occupancy across smaller markets [32] Question: Minneapolis demand drivers - Management highlighted low unemployment and rising housing costs as key demand drivers in Minneapolis [35] Question: New lease growth expectations - Management expects new lease pricing to continue to accelerate, with renewals projected around 3% to 3.5% for the quarter [39] Question: Pricing environment for assets - Management indicated that there is a bid-ask spread in the market, with high net worth and private capital buyers being the most aggressive [66] Question: Financing environment - Management stated that financing remains available, although the term loan environment is somewhat challenged [61]